Profit/Cost Calculation for Three Departments
In the present scenario, Department A buys 3000 quantities of Part 101 internally from Department C and rest of the 1500 quantities from an outside raw material part supplier.
In the proposed scenario, it has been decided by the managers of Department A, B and C that Department A will buy 2000 units from Department C and rest of the 2000 units will be procured from the outside part supplier. This is because Department A thinks that procuring Part 101 from outside vendor costs less than procuring it from Department C. The total costs of procurement for Department ...